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Block 1: Key news
- An Ethereum spot ETF coming soon?
Ark Invest, led by Cathie Wood, and 21Shares have filed the first application for a Spot Ethereum ETF in the US under the ticker "ARKE". If approved, it would be the first spot ETF backed by ether, the second-largest cryptocurrency after bitcoin. The application comes as the US SEC is already considering several applications for spot bitcoin ETFs. Despite delays by the SEC on these ETFs, market players remain optimistic, bolstered by Grayscale's recent victory over the regulator.
- Visa expands with Solana
Visa, the payments giant, has announced plans to integrate USDC stablecoin payments on the Solana blockchain. The initiative, which is in the pilot phase, aims to simplify and accelerate cross-border payments. Within this framework, Visa is collaborating with Worldpay and Nuvei. This effort is part of Visa's growing strategy to explore the blockchain ecosystem, following similar projects on Ethereum. Competition is intensifying with Mastercard, which has also shown an interest in USDC payments.
- Coinbase expands its services in the USA
Coinbase has launched a lending service for its institutional customers, as revealed by a form filed with the Securities and Exchange Commission (SEC). Managed by the Coinbase Credit branch in New York, the new product already represents $57 million with 5 institutional customers. Loans are secured by cryptocurrency collateral, similar to DeFi protocols. This service is distinct from Coinbase Lend, a previous project aimed at retail customers, which was halted following SEC concerns.
- Chainlink and SWIFT collaborate on tokenization
A year after collaborating, Chainlink and interbank network SWIFT have presented positive results regarding tokenized asset transfers between different blockchains. This breakthrough is seen as a crucial step for the tokenization of real assets, attracting strong interest from traditional financial players. The SWIFT report highlights the growing importance of digital assets, with the tokenization of real assets being identified as a potentially trillion-dollar sector of the future. The interoperability offered by Chainlink facilitates this transition.
In a new results report, Swift, #Chainlink, and more than a dozen of the largest financial institutions and market infrastructure providers successfully demonstrated a secure and scalable way to transfer tokenized assets cross-chain using CCIP.
Key results:
- Connected existing... pic.twitter.com/AfJajWAF8F
- Chainlink (@chainlink) August 31, 2023
Block 2: Crypto Analysis of the Week
At a time when the cryptocurrency market is gloomy and the economy as a whole is sailing in troubled waters, staking on Ethereum appears to be a ray of hope for many crypto-investors.
As a reminder, staking enables investors to generate income by locking their assets directly onto the blockchain or via a smart contract in a decentralized finance protocol. It is reporting a staggering 292% increase in the total value locked (TVL) in dollars, reaching the remarkable figure of $40 billion at present. The number of validators continues to grow, with over 778,000 active validators today.
Glassnode
Altogether, almost 25 million ETH, or around $40 billion at the current price, are locked onto the Ethereum blockchain.
Glassnode
The advent of staking in Ethereum, marked by the founding event "The Merge" in September, has been a game-changer. Not only has it paved the way for a more environmentally-friendly cryptocurrency ecosystem by bidding farewell to energy-hungry miners, it has also laid the foundations for a more rewarding cryptocurrency investment experience. While bitcoin remains under scrutiny for its environmental impact, Ethereum staking has brought in passive income, offering stakers who deposit 32 ETH - i.e. those who lock 32 ethers in a staking porotcole - an attractive annual rate of between 3% and 4%.
We can't talk about staking without mentioning its democratized form, liquid staking. This approach extends the benefits of staking to smaller holders. It has to be said that to stall 32 ETH on your own today, in order to become a solitary validator, you need to invest $51,200 at the current price. That's why validators are grouping together to pool their funds, in this case ethers, to become a validator and earn interest. Many have drawn parallels with the age-old bastion of investment security, government bonds. It's been dubbed "crypto's risk-free rate of return", echoing the stability associated with U.S. Treasury bonds.
However, every glimmer of hope has its downside. While it's true that investing in Ethereum is a safer haven than lining up funds on decentralized finance platforms (DeFi) or on now-defunct centralized lenders such as Gemini Earn, BlockFi or Celsius, it is by no means a foolproof strategy. Indeed, the sizeable market share held by giants like Lido is a source of unease for many industry players.
Yet there's no denying that staking is carving out a place for itself in the future of the cryptographic landscape. Various blockchains, from Cardano to Solana, who have been forerunners in the staking field, to older players such as Dogecoin and Zcash, have adopted staking systems or are actively considering them. New players on the crypto scene, such as Sui and Aptos, have entered the fray with their versions of Proof-of-Stake.
All in all, despite the complicated regulatory and economic context surrounding cryptocurrencies, the momentum around staking is undeniable, particularly on Ethereum. It is gradually establishing itself as an essential pillar on blockchains operating with proof-of-stake (PoS), offering a semblance of stability and tangibility amid the volatility inherent in digital assets.
Block 3: Gainers & LosersCryptocurrency chart
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Block 4: A few things to read this weekend
Investors wonder after a turbulent year at Sequoia Capital (Wired)
ODE from a Bitcoin maximalist to the ordinals (Bitcoin Magazine)
FASB adopts crypto accounting and disclosure rule for companies (WSJ)
